credit cards and borrowing capacity

I have 2 credit cards with combined max limit of $30k.

Planning to apply for home loan in near future. I know reducing max limit improves borrowing capacity so I am going to close one card and reduce max limit on 2nd one down to $8k.

question is: Can I apply home loan immediately after credit card changes or is there a recommended time period I have to wait before applying for home loans(so that new credit card limit is considered)?

 

As long as you can evidence the change in credit limit (e.g. interim statement/internet banking summary) then most lenders will be fine with this.

Can make a huge difference to borrowing capacity now days.

 

Credit card limits affect borrowing capacity on roughly a 1:5 ratio. $30k in cards reduces how much you can borrow by about $150k.

Also cards with high limits is an easy road to debt problems. My own opinion is that total card limits should be no more than about 50% of a persons monthly net income.

Lenders can see that you've got $30k in cards from your credit report. An account summary or the next statement will likely be required to verify the limit reduction. Request a closure letter for any cards that are being closed.

 

Make sure you get the closure letter for the card you're closing - that combined with interim statement showing limit reduction on the other card and you're good to go.

 

Depending on customer preferences, can do this during submission/post conditional approval with some lenders too. I.e. can get your approval, subject to limit reduction or cancellation letters.
The impact on borrowing power has become a bit larger with assessment rate cuts & credit card expense increases over recent years. Its 5+ per $1 limit now on OO borrowing power calcs, and more for INV borrowing calcs (extrapolated rental yield).